John Oliver on prediction markets: ‘Betting on war is really dark’ | John Oliver

On the latest Last Week Tonight, John Oliver examined the surging field of so-called prediction markets, which have seen exponential growth in recent months with billions of dollars of bets every week for questions such as “will traffic in the strait of Hormuz return to normal by the end of April” or “will the US confirm that aliens exist by 2027?”

The rapid growth and conversation takeover is thanks in part to aggressive marketing pushes by the two big players in the market, Kalshi and Polymarket. “It is shocking the extent to which prediction markets have proliferated,” the host said. “And sometimes it’s been a little unnerving, given the things that you can now bet on.” He cited more recent queasy betting situations, such as “will Nancy Guthrie’s kidnapper be arrested by 28 February?”

“The impulse to try to make money betting on war or an unfolding tragedy is really dark,” he continued. “When someone dies, you’re supposed to send their family a card that says ‘sorry for your loss’, and not one that says ‘thanks for covering the spread!’”

Prediction markets are not new, Oliver noted, nor are controversial uses of betting, though “the concept of betting on grim outcomes once seemed beyond the pale. But everything started changing a few years ago when Kalshi and Polymarket launched their startups, opening the door to the free-for-all that we have now.”

Oliver then dug into that free-for-all, starting with the companies’ claim that they are not in fact gambling sites profiting from instability, since “the only groups that society has decided are allowed to profit from instability are military contractors, members of the Trump family and the Mormon wives”.

“Both Kalshi and Polymarket will fiercely argue that that’s not what they are at all,” he added. “They argue that gambling involves playing against ‘the house’, while their users are trading against each other, with the companies typically just charging a fee on trades. They’ll also insist that they’re simply modern versions of commodity futures markets, which have been around for over a century.”

“And crucially, they’ll say that the bets they sell are financial instruments that enable ordinary people to hedge against future risks.”

As the Kalshi CEO, Tarek Mansour, put it, the company was “very important” because it allowed people to bet on student loan forgiveness, and use money they won via bets for loans that weren’t forgiven. “Apparently, they’re just trying to help people make wise planning decisions,” Oliver side-eyed. “And that might make some sense when you’re talking about an economic indicator or a specific event that might impact you personally. But what exactly is the financial loss that I’m hedging against if I bet on the next winner of the Masked Singer, or whether or not Mr Beast will say ‘feastable’?”

To highlight just how absurd that claim of financial wisdom was, Oliver then played a clip of YouTuber Champ and a friend betting on Donald Trump saying certain phrases in a speech, yelping in delight when the president said “Sleepy Joe” or “transgender”, as they had predicted.

“That is not using a financial instrument to hedge risk,” Oliver scolded. “It’s taking advantage of a sundowning geriatric’s rapidly declining verbal abilities. Oh, you bet he’s going to say the word ‘nasty’? Great guess, dude. It’s one of the last 200 words he has left.”

“Honestly, that clip is unsettling on multiple fronts,” he added. “One, because the president’s harmful rhetoric is being divorced from its actual meaning. But two, because that’s not what these bros are supposed to be doing. They shouldn’t be betting on Trump’s speeches. They should be sitting on that same couch and watching YouTube highlight reels of Kevin Love outlet passes, six Modelos in, forging a deep, beautiful friendship that will last for 40 years and that they will never, ever discuss. Nature has lost its course.”

The refusal to identify themselves as gambling sites has paid off, he then noted: “By insisting they are ‘financial exchanges’ offering not bets but ‘event contracts’, prediction markets are not only able to operate in states where gambling isn’t legal, but also get around state taxes and minimum age requirements in states where it is.”

How are they getting away with this? A lot has to do with the man in the White House, Oliver argued, as both companies have forged strong connections with the Trump family. Donald Trump Jr is an investor in and unpaid adviser to Polymarket, and a paid adviser to Kalshi. Oliver could not think of a single skill the nepo baby would bring to the table, but “if hiring Don Jr helped get these companies on Trump’s good side, it’s a bet that’s paid of massively for them”. Because while the Biden administration tried to rein in some prediction markets, the Trump administration have essentially let it go unregulated, by stripping the Commodity Futures Trading Commission (CFTC) of its power.

Under the Dodd-Frank Act of 2010, the CFTC is supposed to be comprised of five commissioners, with two from the minority party, but it currently has only one: Michael Selig, a massive prediction markets cheerleader. And it sure seems like there’s people with intimate knowledge of government affairs using these markets for profit; Oliver pointed to one person who made $400,000 after the capture of Nicolás Maduro with a last-minute bet. “It gets genuinely chilling when you realize that people seem to be using insider info to bet on life or death events,” he noted.

What can be done? At minimum, “the CFTC should be doing more”, he said. “And while it says it’s writing new rules, I wouldn’t expect much, especially for as long as this fucking guy” – Selig – “is in charge.” There are numerous cases working their way through the courts, though Oliver had little faith in the supreme court nor in Congressional action – “given the president of the United States has a kid currently advising both major companies, I wouldn’t hold your breath.”

“But at some point we do need to put in place some basic guardrails here,” he continued. “And until then, if we can’t change how these sites operate, we should at least try and change how we individually see them.” He also called on news organizations, particularly TV channels, to “stop laundering these companies’ reputations for them by putting their odds on screen like they are actual news”.

“Look, on a personal level, if you’re considering using these markets to gamble, try and remember that you are statistically likely to lose money,” he concluded. “And while I am not against gambling per se, there is something so grim about these sites turning every aspect of our lives into a bet. Because sure, money can be won on them. But in that happening, something also gets lost. Specifically a society where things aren’t only weighed in financial terms and where people engage with news for what it means to human beings, not just because they have $50 riding on it.

“And when something unexpected happens in the world, it would be really nice not to have to automatically question whether it’s only because someone is trying to move a market.”